Current Affairs

How does the Government’s Plug-in Car Grant work?

Plug-in

First introduced in 2011, the plug-in car grant (PiCG) was established by the Government to encourage the buyers of new cars to choose low emissions models. It worked by automatically reducing the purchase price of new plug-in hybrid and electric vehicles with a subsidy to make them more affordable.

In this article we’ll look into how the PiCG works for new car buyers in 2022, and how it’s evolved over the years.

How does the PiCG work in 2022?

The grant will cover up to 35% of an eligible model’s purchase price, but it’s capped at £1,500. The list price of the vehicle must also be below £32,000 (not including optional extras) to qualify, and it has to emit less than 50g/km of CO2 and be able to travel at least 70 miles with no CO2 emissions at all. The model must also appear on the Government’s approved list of cars, previously known as ‘category 1’.

For now, this effectively means that only the most affordable electric cars qualify, with popular models including the Citroën e-C4, Fiat 500 Electric, Hyundai Ioniq Electric, MG 5 and ZS EV, Nissan Leaf, Peugeot e-208, Renault Zoe and Vauxhall Corsa-e amongst those on the list.

Buyers don’t need to check any boxes or fill out any paperwork to get the £1,500 reduction, as this is taken care of by the dealership and manufacturer. When shopping around, it’s important to check exactly what you are paying for a new car, as some vehicles are advertised with the PiCG already deducted from the list price to help tempt buyers, while others are not.

While the criteria for the PiCG doesn’t rule out plug-in hybrids (PHEVs) from being eligible, there are no models capable of sub-50g/km emissions and a 70-mile range that exist yet. Several Mercedes-Benz PHEVs have an official zero-emission driving range of more than 60 miles, so the technology is getting closer, but these examples would also breach the £32,000 price limit.

How has the PiCG changed over the years?

When it first arrived, the PiCG still contributed up to 35% of the list price of a new EV or PHEV, but the cap was a much more generous £5,000. Its intention was to accelerate the adoption of low emission vehicles and bring their price more in-line with equivalent diesel and petrol models.

In 2018 the maximum grant was reduced to £4,000, and new categories were introduced which effectively removed PHEVs from being eligible. In the following years, the grant has been reduced by £500 annually, before being cut from £2,500 to £1,500 in December 2021. At the same time, the price limit for all qualifying models was axed from £35,000 to £32,000.

At the time, the Government said these changes would allow the scheme’s funding to go further and support more affordable vehicles. Currently, the scheme has been extended until the 2022/23 financial year. By March 2021, the Government’s PiCG had contributed £1.3 billion towards the cost of approximately 285,000 low-emission vehicles.

According to the Government, the approach is ‘clearly working’, because while the grant has been gradually reduced year-by-year, the sales of electric vehicles has ‘soared’. Sales of EVs in 2021 exceeded those of 2019 and 2020 levels combined.  

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